Any way to to back out from Foreclosure winning bid?

Question

Hello Foreclosure experts, please help a good friend of mine.

Some one I know well, has a winning bid at court house auction sale, and passed the upset bid period.  Normally it would be a good thing, except that he was bidding on the second mortgage foreclosure and not aware of outstanding first mortgage because it seems the recorded deed-of-trust on first mortgage was different from the rest of the documents.  So, basically title search was incomplete.

As far as I know he has to let it go his 5% deposit and not close the deal (he cannot take the deal because first mortgage is pretty high and numbers don't work out).

Is there any other options/ideas to save that 5% deposit and get back at least part of it?

Thanks a lot in advance from me and my friend.

- Sam

Jon Holdman · Answer

If he gets away with only the 5% loss he's doing a LOT better than he would do here in CO, and in most states.  Here's its cash on the barrelhead, 100%, at the auction.  We don't have upsets, but do have redemption periods.  But your cash is tied up during that period.

You mention a title search.  Did he buy title insurance?  If so, the title insurance company might pay out on the bad title.

Has he spoken with the trustee (or whatever it is there?)  What did the have to say.

Bill Gulley · Answer

As Jon said, they are lucky it's 5%. Pay the piper and walk away....but really that doesn't seem like enough on the sale, they better check! It might be 5% plus costs. There will have to be a new sale, new notice, new filing, new publication etc. so it sounds like (since it was a second mtg and probably a small amount) 5% may not cut it. Bill